12.4 Garage Coverage Form and Garagekeepers

From Garage Form to Auto Dealers Form

Businesses that sell, service, store, or park autos for others — dealers, repair shops, body shops, service stations, and parking operations — have a unique exposure: they regularly take customers' vehicles into their care. ISO historically wrote this on the Garage Coverage Form. For auto and trailer dealers, that form was replaced by the Auto Dealers Coverage Form (CA 00 25), which bundles three exposures into one contract:

• Garage (auto dealers) liability — premises and operations plus auto liability
• Garagekeepers — damage to customers' autos in the insured's care
• Dealers' physical damage — the insured's own inventory of vehicles

Non-dealer service risks (a body shop without sales) are typically handled through Business Auto with a garage endorsement or a similar specialty form.

Garage / Auto Dealers Liability

Garage liability blends two worlds:

• Auto exposures — bodily injury or property damage arising from the ownership, maintenance, or use of a covered auto in the garage business (including test drives and lot movement).
• General-liability-style operations — slip-and-falls on the premises, faulty repairs, and products-completed-operations from work performed.

Trap: garage liability does NOT pay for damage to a customer's auto in the insured's care — that is precisely the gap garagekeepers fills. Garage liability protects against injury to people and damage to others' property generally, but the customer-auto-in-care exposure is carved out and handled separately.

Garagekeepers — Three Coverage Options

Garagekeepers protects the insured for physical damage to a customer's auto left in the insured's care. There are three options, and the difference is heavily tested:

The covered causes mirror physical damage — comprehensive, collision, specified causes of loss — applied to customers' autos.

Legal Liability vs. Direct — Worked Examples

Scenario: A customer's $30,000 car is parked in the shop lot and is damaged by hail ($8,000) with no negligence by the shop. The garagekeepers limit is $100,000 per location with a $250 deductible.

• Legal Liability option: The shop was not negligent, so it owes nothing — and the legal-liability garagekeepers pays $0. The customer must use their own comprehensive coverage.
• Direct Primary option: Pays regardless of fault: $8,000 − $250 = $7,750, primary, with no need to involve the customer's policy.
• Direct Excess option: Pays $7,750 only after the customer's own auto policy is exhausted; if the customer has no comprehensive coverage, the direct-excess form responds as if primary.

This is why a quality-conscious dealer buys direct primary — customers are made whole quickly without fault disputes.

Limits, Deductibles, and Common Traps

• The garagekeepers limit applies per location, not per vehicle, so a single catastrophe (a fire destroying many cars on the lot) can exhaust the limit fast.
• A deductible usually applies per customer auto, except some forms waive it when the insured is not negligent under the legal-liability option.
• Dealers' physical damage (the insured's own inventory) is separate from garagekeepers (customers' cars) — students conflate the two.

Dealers' Physical Damage and the False-Pretense Peril

Dealers' physical damage insures the dealer's own auto inventory against comprehensive and collision-type losses, often on a reporting basis — the dealer reports monthly values and pays premium on the average inventory at risk. Underreporting triggers a coinsurance-style penalty at loss time, so accurate reporting matters.

A distinctive add-on is the false-pretense coverage, which responds when someone acquires a vehicle through trick, scheme, or fraud (for example, a buyer pays with a bad check and drives off). Ordinary theft coverage may not respond because the dealer voluntarily parted with the vehicle, so false-pretense closes that gap. Dealers also schedule signs, supplies, and dealer plates under the form.

Garagekeepers Selection in Practice

Choosing among the three garagekeepers options is a real-world underwriting decision:

• A valet service or parking garage typically buys direct primary so it can settle quickly with customers and preserve goodwill, accepting the higher premium.
• A budget-conscious independent repair shop may carry only legal liability, paying only when its own negligence (e.g., a careless lot move) causes the damage.
• Direct excess is a middle path for a shop confident most customers carry their own physical damage.

Trap: under legal liability, an uninsured customer whose car is damaged by a peril the shop did not cause — hail, a falling tree, a third party's hit-and-run — recovers nothing from the shop, which is why service quality often justifies the direct-primary upgrade.